Mercantile Bank Corporation · NASDAQ:MBWM
Mercantile Bank — Q4 2021 Earnings Presentation
32 slides from Mercantile Bank's earnings presentation, Jan 18, 2022
Slide 1: Conference Call and Webcast Presentation
AMercantile Bank Corporation Conference Call and Webcast Presentation
Slide 2: Forward-Looking Statements
Forward-Looking Statements Forward-Looking Statements ‘This news release contains statements or information that may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as: ‘antic
Slide 3: A Commitment to Excellence: Performance Highlights
A Commitment to Excellence Performance Highlights As of December 31, 2021 + Full year 2021 net income of $59M up over 33% fromm 2020 + 2021 $180M Mil and , ly noninterest income growing a loa Jud 2021 total assets of just five basis points Bre 19 income, in 2021 . it nding cost reduction + 2021 cash
Slide 4: Founded in Grand Rapids in 1997
* Founded in Grand Rapids in 1997 * Third largest bank headquartered in Mit * 44 banking locations: * Expanded to Cincinnati, Ohio and Midland, Michigan in 2020 & Petoskey, Michigan in * Addition of new lending teams focused at driving growth in all markets Top 5 Michigan Markets* kent Clinton Kalam
Slide 5: Strategic Initiatives
Strategic Initiatives LEVERAGE INVESTMENTS *+ Expand usage of Treasury yement product + Petoskey, Michigan * Cincinnati, Ohio jesenceinGrand Rapids/ Kent County * Capitalize on mi disruptions + Continue to deepen new rent relationships DIGITAL DELIVERY * Expand customer lization of digital banking s
Slide 6: Forward Progress
Forward Progress ESG deployment of VaMs and the opening of peatons innew marke. Providing hing learning and growth v of method ks, articles, and training sessions Supervisors provided with best practices, resources and tools with which to engage their teams and promote collaboration across all depar
Slide 7: Financial Performance: Fourth Quarter 2021
Financrallberfonmance Fourth Quarter 2021
Slide 8: Diversified Revenue
e 8 g oe 25 £5 ia Diversified Revenue Diversified & Growing Noninterest Income ‘ Noninterest income made up 28% of total revenue in 4Q 2021 Up from 23% in prior year period + While mortgage banking revenue remains the primary driver of noninterest income, virtually all areas contributed to growth +
Slide 9: Noninterest Income
Noninterest Income Strategic Initiatives Robust mortgage volume led by purchase activity, supported by continued strong refinance activity e 8 2 =i aE se £s ie MORTGAGE PIPELINE YEAR-OVER-YEAR TREND: VOLUME & UNITS. 2 8 = 5 s . oe # ee gs s OLE bf 2021 2620 —2021 Units. —7020 Units (dA MERCANTILE BA
Slide 10: Noninterest Income
Noninterest Income Strategic Initiatives Well-positioned to capture market share with Proven record of fast and effective processing and strategic hires of seasoned lenders across Mercantile’s markets e & < S iS S ye o a 3° e 5 = i MORTGAGE PIPELINE YEAR-OVER-YEAR TREND: APPLICATIONS COOOL PSP ISS 9
Slide 11: Diversified Lending
Strongieneditacultune Diversified Lending
Slide 12: Asset Quality Metrics
= 5 iS (3) m 3 a a Asset Quality Metrics Five Quarter Trends & YTD In thousands} Net loan charge-offs 3 ines ($1340) $390 S318) ($428) SOS S696} ($27) Net loan charge-offs to 5 . 6) 7 ws ’ eee (016%) 0.05% — (0.04%) 0.05%} 001% + (0.05%) (2.0K) Allowance to loans 102% «1% «MISH 1% 1H NO Nonperformin
Slide 13: Core Commercial Loan Growth
= H 5 > 2 § & Core Commercial LOAN GrOWthR ccisicin mitions 123v21 (9/30/21. /30/21 12/3/20 Core Commercial Loans $2910 $2:727 $2564 $2,429 PPP Loans $40 sé $248 $365, Total Commercial Loans $2,950 $2843 $2810 $2,794 y/s/21 r/sn7 Core Commercial Loans $2910 $2206 PPP Loans $40 $365 - cS s Total Comm
Slide 14: Commercial Loan Portfolio Composition
Commercial Loan Portfolio Composition = 5 iS (3) 4 5 Sz 35 ao Loan Type* 1m Commercial & Industrial lm Commercial Vacant Land, Land Development & Residential Construction I Commercial Real Estate = Owner Occupied Commercial Real Estate = Non-Owner Occupied @ Commercial Real Estate = Multi-Family & R
Slide 15: Loan Concentration
= 5 iS (3) m 3 a a Loan Concentration Industry* I Real Estate, Rental & Leasing WW Services @ Agriculture, Oll & Gas Extraction & Utilities 1 Construction 1 Manufacturing Wholesale Trade I Transportation & Warehousing Information I Finance & Insurance (A MERCANTILE BANK CORPORATION [15
Slide 16: Commercial Credit Exposure
Commercial Credit Exposure = 5 iS (3) m 3 a a Grades +4 $6891 $283 $3461 $503.4 sn94 Grades 5-7 st084 948 $2081 ssnz $570 Grades 8-9 08 $01 me $127 $02 Total Commercial $0973 $432 $5658 1027.4 si766 % of Total Commercial Loans as of December 31,2021 “Exel (A MERCANTILE BANK CORPORATION | 16
Slide 17: Strong Credit: Past Due Loans
Strong Credit Past Due Loans Commercial & Retail Past Due Loans* (5 9 mitions) ‘Commercial & Industrial = - $02 $o2 $373, SNNBTS. $02. Vacant Land, Land Development, Residential - - - - $432 $432 - Construction Real Estate— Owner Occupied - - - - $658 $5658 - Real Estate-Non-Owner a - - - - $10274 =
Slide 18: Strong Credit Culture: Past Due Loans
Strong Credit Culture Past Due Loans
Slide 19: Managing Abundant Deposits & Liquidity
Managing Abundant Deposits & Liquidity Total Deposits of $4.08B* + Continue to attract local deposits, supporting improved funding costs Total Deposits 315 so $05 $00 RAYA 120 BRYS WEVE BEAT Loan to deposit ratio of 85% Noninterest-bearing deposits up 17% in 2021 and now make up 4194 of total deposi
Slide 20: Appendix
Append Thank you for your interest in our company
Slide 21: Executive Management Team
Appendix Robert B. Kaminski, Jr. n hief Raymond E. Reitsma Executive Management Team Charles E. Christmas EVE Executive Officer Mr. Kaminski joined the Bank in 1997 and has 35 years of ‘commercial banking ‘experience. Mr. '& President of the Bank Mr. Reitsrna was appointed President of the Bank effe
Slide 22: Product Offerings
Appendix Product Offerings ‘Autobooks for Small Business with Electronic Invoicing & Collection v Bill Payment & ACH v v v v v Cash Management 2 v y v v Credit Card Rewards S. ¥ rv v v Health Savings Account 7 7) Zi a 7 mais savers oe integrated Payables v v v v v Integrated Receivables aS y v wy v
Slide 23: COVID-19 Activities & Timeline
Appendix COVID-19 Activities & Timeline JANUARY 2020 * Monitoring initial reports of COVID-19 FEBRUARY 2020 * Pandemic plan activated to ensure the health and safety of our employees and customers. * Branches open by appointment only (3/1) + inktation of paymen rele seistance progiarne fo commercial
Slide 24: Paycheck Protection Program (PPP)
Appendix Paycheck Protection Program (PPP) LOAN BALANCE SEGMENT # PPP Round One PPP Round Two Totals NET FEE INCOME ACCRETION 4° Quarter 2020 Quarter 2021 2" Quarter 2021 31° Quarter 2021, 4 Quarter 201 Remaining as of December 31, 2021 $ $553,100.00: #208.500.000 $761,600,000 # $ # $ (1a) ($551,800
Slide 25: Consolidated Reports of Income
Appendix Consolidated Reports of Income (Unaudited) Unaudited Net income Basic earnings per share Diluted earnings per share. Average basic shares outstanding Average diluted shares outstanding 8 15696204 15,696,451 $ Bec. 31, 2020 14,082,000 087 087 16,279,052 16279248 Deesi20at Dee 3.2020 $ — 4413
Slide 26: Consolidated Reports of Income: Net Interest Income
Appendix Consolidated Reports of Income (Unaudited) Net Interest Income INTEREST INCOME Loans, including fees Investment securities Other interest-earning assets. Total interest income INTEREST EXPENSE Deposits Short-term borrowings Federal Home Loan Bank advances Other borrowed money Total interest
Slide 27: Consolidated Reports of Income: Noninterest Income
Appendix Consolidated Reports of Income (Unaudited) Noninterest Income Service charges on accounts Mortgage banking income Credit and debit card income Interest rate swap income Payroll services Eamings on bank owned Ii surance Gain on sale of branch on income Total noninterest income Dae 31,2020 s
Slide 28: Consolidated Reports of Income: Noninterest Expense
Appendix Consolidated Reports of Income (Unaudited) Noninterest Expense Selaries and benefits Occupancy Furniture and equipment Data processing costs Charitable foundation contributions (Other expense Total noninterest expense Income before federal income tax expense Federal income tax expense Net I
Slide 29: Yield on Assets / Cost of Funds
Appendix Consolidated Reports of Income (Unaudited) Yield on Assets/ Cost of Funds Yield on loans 407% 407% 399% 4.03% 434% Yield on securities 146% 146% 154% 169% Yield on other interest-earning assets 015% 016% 012% 012% Yield on total earning assets 312% 313% 320% 3.26% 355% Yield on total assets
Slide 30: Mortgage Banking Activity
Appendix Consolidated Reports of Income (Unaudited) Mortgage Banking Activity Total mortgage loans originated Purchase mortgage loans originated Refinance mortgage loans originated Mortgage loans originated to sell Net gain on sale of mortgage loans onan e 210200 124,600 85700 129500 6900 259,500 14
Slide 31: Asset Quality
Appendix Consolidated Reports of Income (Unaudited) Asset Quality Gross loan charge-offs Recoveries Net loan charge-offs (recoveries) Net loan charge-offs to average loans Provision for loan losses Allowance for loan losses Allowance to loans Allowance to loans excluding PPP loans: Nonperforming lea
Slide 32: Nonperforming Assets Reconciliation
Appendix Consolidated Reports of Income (Unaudited) Nonperforming Assets Reconciliation Beginning balance $ 2900 3100 3200 4100 4700 Additions $ 200 400 500 yoo 1,000 Return to performing status, $ ° © ° 09} ° Principal payments $ (400) 00) 600) (600) 00) Sale proceeds $ (99) (200) ° 09) (200) Loan